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U.S. Crude Oil Exports: Opportunities and Challenges

U.S. Crude Oil Exports: Opportunities and Challenges

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Daniel J. Weiss, Senior Fellow and Director of Climate Strategy at the Center for American Progress, testifies before the U.S. Senate Committee on Energy and Natural Resources.
Daniel J. Weiss, Senior Fellow and Director of Climate Strategy at the Center for American Progress, testifies before the U.S. Senate Committee on Energy and Natural Resources.

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Published by: Center for American Progress on Feb 05, 2014
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1 Center for American Progress |  Testimony on “U.S. Crude Oil Exports: Opportunities and Challenges”
 Testimony on “U.S. Crude Oil Exports: Opportunities and Challenges”U.S. Senate Committee on Energy and Natural Resources
Daniel J. WeissSenior Fellow and Director of Climate StrategyCenter for American ProgressJanuary 30, 2014
Chairman Wyden, Ranking Member Murkowski, hank you or he opporuniy o esiy abou wheher o lif he crude oil expor ban. Since 2008, he Unied Saes produced more and used less oil due o advances in drill-ing echnology and more-efficien vehicles. Tis reduced oil impors and lowered our  vulnerabiliy o a oreign oil supply disrupion ha could cause a gasoline price spike. However, he Energy Inormaion Adminisraion, or EIA, predics ha he growh in oil producion will peak in 2019 and domesic producion will slowly decline afer ha.Lifing he ban on crude oil expors could squander his new energy securiy and price sabiliy. o mainain hese benefis, we urge you o deend he domesic crude oil expor ban.  Afer he 1973 Arab oil embargo, Congress enaced he Energy Policy and Conservaion  Ac, which banned nearly all expors o domesically produced crude oil o keep his pre-cious commodiy a home and insulae drivers rom price shocks.
1
 A he ime o he ban, he Unied Saes produced 64 percen o is oil and liquid uels while imporing only 36 percen.
2
 In 2013, we produced and impored nearly he same proporions o peroleum. Te only real-world experience o lifing an oil expor prohibiion occurred ollowing he 1996 removal o a ban on Alaska oil expors.
3
 During he ban, much Alaskan oil  was shipped o he Wes Coas. A Congressional Research Service analysis ound ha lifing he oil ban exacerbaed he exising price differenial beween Wes Coas and naional gasoline.
 In 1995 … West Coast pump prices [were] only 5 cents per gallon above the national average. But by 1999 West Coast gasoline was 15 cents per gallon higher. When crude exports stopped in 2000, the average [difference] … was 12 cents; it [later] narrowed  urther to 7 cents. … When Alaskan oil exports ceased, the gasoline price differential between the West Coast and the national average did decline.
4
 
2 Center for American Progress |  Testimony on “U.S. Crude Oil Exports: Opportunities and Challenges”
Tis experience suggess ha lifing he naionwide crude oil expor ban could similarly raise gasoline prices. Barclays Plc. predics ha lifing he expor ban could increase oal spending on moor vehicle uel by $10 billion per year.
5
 Sandy Fielden, direcor o energy analyics a RBN Energy, old Bloomberg ha i here are more oil expors, “Te mos obvious hing ha’s going o happen is ha crude prices will go up and so will gasoline.
6
 I he ban is lifed, oil companies could sell some o heir oil a he higher world marke price, which EIA projecs will average $9 per barrel more in 2014 or some domesic oil.
7
EIA predics ha in 2014 he Unied Saes will consume 5 million barrels per day, or mbd, o oil and liquids more han we produce. Tis gap  beween demand and supply will coninue a leas hrough 2040, ulimaely growing by 13 percen. Domesic oil sold overseas mus be replaced by more expensive impored oil. Tis higher price could be refleced in higher gasoline prices.Te Unied Saes impors more oil rom he Organizaion o Peroleum Exporing Counries, or OPEC, han rom any oher single source. OPEC oil is very vulnerable o supply disrup-ions.
8
EIA ound ha:
 Disruptions may occur fequently … or a variety o reasons, including conflicts [and] natural disas-ters. … Total outages among the Organization o the Petroleum Exporting Countries (OPEC) …  producers recently rose to historically high levels.
9
 A commission o reired senior U.S. miliary officers recenly noed ha, “No mater how close he counry comes o oil sel-sufficiency, volailiy in he global oil marke will remain a serious concern.
10
Oil produced in he Unied Saes is significanly less vulnerable o supply disrupions and hereore provides more energy securiy.Tere is litle benefi o Americans rom lifing he  ban, paricularly since oil companies are already making huge profis even wih i. Te five larges oil companies󲀔BP, Chevron, ConocoPhillips, Exxon
WTI crude oil
FIGURE 1
Crude oil futures prices
In dollars per barrel
Source: Energy Information Administration, "Petroleum & Other Liquids: Spot Prices," available at http:// www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm (last accessed January 2014).
$150$120$90
Jan. 2011Jan. 2012Jan. 2013Jan. 2014
$60
 
Brent crude oil
FIGURE 2
U.S. petroleum and other liquid fuels supply, consumption, and net imports
In millions of barrels per day
Source: Energy Information Administration, AEO2014 Early Release Overview (U.S. Department of Energy, 2014), available at http://www.eia.gov/forecasts/aeo/er/early_production.cfm?src=Petroleum-b2.
ConsumptionDomestic supplyNet imports25201510
2001
2006201120162021202620312036204050
 
60%25%32%
 
3 Center for American Progress |  Testimony on “U.S. Crude Oil Exports: Opportunities and Challenges”
Mobil, and Shell󲀔made a combined oal profi o $1 rillion over he las decade,  based on heir quarerly financial repors.
11
In 2013, he Unied Saes expored an average o nearly 1.5 mbd o diesel uel and finished moor gasoline.
12
 Te sale o finished producs enables American workers o provide added value o he crude oil. AFL-CIO Presiden Richard rumka opposes lif-ing he oil expor ban because he believes ha American workers should make crude oil ino refined producs here, raher han expor and refine i overseas.
13
Our ransporaion sysem is almos enirely powered by oil and liquid uels.
14
 Since we coninue o impor one-hird o our oil, American amilies, he economy, and our energy securiy remain vulnerable o sudden supply disrupions and price spikes. We mus inves in alernaive, nonperoleum ransporaion uels, including elecric vehicles, advanced clean biouels, and public ransi o reduce our dependence on vulnerable oil supplies. Tese invesmens would also reduce carbon polluion responsible or climae change.Currenly, here is no independen analysis ha predics ha energy securiy and uel prices would remain unchanged afer he removal o he crude oil expor ban. Presiden Obama and Congress should no rade away our enhanced gasoline price sabiliy and energy securiy. Insead , you should join ogeher o deend he ban on crude oil expors.

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